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Mnuchin Must Recuse From Sears Matters on Pension Panel, Senators Say

(Bloomberg) -- Three Democrats on the Senate Finance Committee are demanding U.S. Treasury Secretary Steven Mnuchin formally recuse himself from any matters before the Pension Benefit Guaranty Corp. related to Sears Holding Co., where he was once a board member.

Democratic Senators Bob Menendez, Sherrod Brown and Ron Wyden, the ranking Democrat on the panel, made the demand in a letter to Mnuchin Oct. 19. Mnuchin sits on the board of the federal PBGC, which considers applications from companies to terminate their pension plans and it pays retirees, at least in part, if the employer defaults. The agency is listed among the biggest unsecured creditors of Sears, which declared bankruptcy earlier this week.

Mnuchin promised in his confirmation hearing to recuse himself from any Sears matter that came before the pension board. “We are concerned that anything short of full recusal will present a significant conflict of interest and risk bias in any PBGC decisions and actions,” they wrote. Officials at the Treasury department didn’t immediately respond to a request for comment.

Mnuchin was a member of Sears’s board from 2005 until December 2016, and before that was a director for Kmart Corp., which merged with Sears in 2005. The senators asked Mnuchin to confirm that he had divested previously disclosed stakes in Sears stock, interests in Seritage Growth Properties, which leases stores to Sears, and ESL Partners, the hedge fund run by Sears Chairman Eddie Lampert.

The senators also said Mnuchin and Lampert were college roommates and close friends, with Lampert attending the confirmation hearing and sitting in seats reserved for family and friends.